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LEADERSHIP AND CHANGE

MANAGEMENT (LCM)

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Learning Outcomes

LO5. Critically appraise change theories, tools and

techniques.

Indicative content:

Describe change theories, tools and techniques

Analyse these theories, tools and techniques within given

organisations

Appraise the use of risk management techniques in themanagement of change

Assess the impact of globalisation on change theories,

tools and techniques

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Change: Predicting the future

This telephone has too many shortcomings to be

seriously considered as a means of communication.(Western Union internal memo, 1876)

Airplanes are interesting toys, but of no militaryvalue. (Marshal Foch, 1911)

Who the hell wants to hear actors talk? (HM Warnerof Warner Brothers, 1927)

I think there is a world market for maybe fivecomputers. (Thomas Watson, Chairman IBM, 1943)

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Approaches to change management

Two dominant approaches

The Planned Approach 1940s

The Emergent Approach 1980s.

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The Planned Change

An long established approach

Many theorists, such as Lewin, Kotter etc

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Emergent change

Open-ended process

Adjusting to changing external environment

Bottom-up

Unpredictable

Cannot be pre-planned

Learning process

No universal rules.

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Emergent Change

The recurring story is one of autonomousinitiatives that bubble up internally; continuous

emergent change; steady learning from bothfailure and success; strategy implementationthat is replaced by strategy making; theappearance of innovations that are unplanned,

unforeseen and unexpected; and small actionsthat have surprisingly large consequences.

(Weick, 2000)

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Selection of an Appropriate Model or Tool

Before selecting a particular performance management model,improvement tool or approach, authorities need to be clearwhat they are trying to achieve and why. This will involveasking a series of questions, including:

What are you aiming to change and improve?

What outcome are you looking for?

Does the improvement need to be holistic covering all theorganizations activities or designed for a specific task, service orarea of activity?

What is the key driver for change i.e. inspection or review, changeof staff etc

What is the timescale for the change?

What resources are available?

To what extent do you want to involve staff in the changes?

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Kotter's Eight-Stage Process

Establishing a sense of urgency.

Creating a guiding coalition.

Developing a vision and a strategy. Communicating the change vision.

Empowering employees for broad-based action.

Generating short-term wins.

Consolidating gains and producing more change.

Anchoring new approaches in the culture.

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Balanced Scorecard

A strategic planning and management system to alignbusiness activities to the vision and strategy of theorganization, improve internal and external

communications, and monitor organizationperformance against strategic goals.

Originated by Drs. Robert Kaplan (Harvard BusinessSchool) and David Norton

To give managers and executives a more 'balanced'view of organizational performance.

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Adapted from The Balanced Scorecardby Kaplan & Norton

BALANCED SCORECARD

the four perspectives

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Lewins Three Stages of Planned

Change

Unfreezing

create a need for change

minimise resistance (reduce resisting forces)

Changing implementation of new systems of operation

employees learn new attitudes and behaviours

Refreezing

positive reinforcement of desired outcomes to promoteinternalisation of new behaviours

evaluation to ensure new ways habitualised

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Lewins 3 Stage Model

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Lewin's 3 Stage Model

3 Stage Model: from one static state via a progression shift,to another static state

Stage 1: Unfreeze

Resistance to change

creating the right conditions for change to occur

analysis of the current situation

dialogue and re-educational activities team building and personal development.

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Stage 2: Transition

The transitional 'journey' is central

a period of confusion

old ways are challenged, but there is no clearunderstanding of the new ways

Good leadership is important, and coaching,counseling or psychological support may beneeded.

The end goal - 'unfrozen' state and keep themthere.

new structures and processes are put in place

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Stage 3: Refreeze

The changes implemented are then 'frozen'

supporting mechanisms such as policies, procedures and

reward systems The end goal - to achieve a 'refreeze',

re-establishing a new place of stability

elevate comfort levels by reconnecting people back into

their safe, familiar environment. Refreezing takes people from a period of low productivity

in the transitional state to a stable and productive state.

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Beckhard and Harris's Three States ModelPresent, Transition and Future States

Very similar to Lewin's modelwith a further clarification thatmangers should expect low productivity in the transition periodand must plan accordingly

CURRENT STATE Clear roles

Known skills

Known styles

Clear relationships

Expected performance

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Beckhard and Harris's Three States Model

TRANSITION STATE

Flux

Experimentation

Uncertainty

Learning lower performance

FUTURE STATE

Uncertain roles

New skills New-styles

Different relationships

Improved performance

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McKinsey 7S Model

Strategy: the direction and scope of the company over the

long-term.

Structure: the basic organisation of the company, its

departments, reporting lines, areas of expertise and

responsibility (and how they inter-relate).

Systems: Formal and informal procedures that govern

everyday activity, covering everything from management

information systems, through to the systems at the point ofcontact with the customer (retail systems, call centre systems,

online systems, etc).

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McKinsey 7S Model

The 4Ss across the bottom of the model are less tangible, more

cultural in nature, and were termed Soft Ss by McKinsey.

Skills: The capabilities and competencies that exist within

the company. What it does best.

Shared values: The values and beliefs of the company.

Ultimately they guide employees towards valued

behaviour.

Staff: The companys people resources and how they aredeveloped, trained and motivated.

Style: The leadership approach of top management and the

companys overall operating approach.

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McKinsey 7S Model

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McKinsey 7S Model

In combination, the 7Ss provide another effective

framework for analysing the organisation and its

activities.

In a marketing-led company they can be used to

explore the extent to which the company is working

coherently towards a distinctive and motivatingplace in the mind of the consumer.

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Managing Risk in the Context of Change

Planning change requires the organisation to

identify potential risks associated with the

intended change and its processes. These risks may

relate to both the internal and externalenvironment.

Identifying and factoring in risk when implementing

change can reduce the likely problems that might

arise as a result of the changes planned.

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Risks that may arise in implementing change

include

Financial risks

Market-related risks

Production and delivery risks

Supplier risks

Other external stakeholder risksthe local

community, the natural environment

Organisational and management risks Staffing riskscapability and capacity

Staffing riskscommitment, morale, retention

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Managing Risk

Having identified possible risks associated with change

that you plan, options include:

a) Know what your risk exposures are and how they

can affect you b) Transfer the risk. Insurance is the most common

technique used to protect against risk c) Seek to avoid

the risk

d) Control the risk

e) Retain the risk

f) Indemnity agreements

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Change and the impact of globalisation

Recognise how globalisation imposes change on

different types of organisations and the types of

change that are likely to occur. Useful reading on

this topic is Atul Vashisthas (2007) paper onChange Amidst Globalization

This identifies the key principles to adopt when

facing the external pressures for change which

globalisation of the world economy may impose.

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Globalisation

Sustainability?

Workforce diversity?

Business ethics?

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Globalisation (Continued)

Sustainability

The regenerative and assimilative capacities ofthe biosphere cannot support even the current

levels of consumption, much less the manifoldincrease required to generalize to higherstandards of living worldwide. Still less can theplanet afford an ever-growing human population

striving to consume more per-capita.(Lines, 2002: 126127)

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Sustainability

encompasses three levels: the individual, the

organizational and the societal. Sustainability at one levelcannot be built on the exploitation of the others. These

levels are intimately related to the organizations keystakeholders: personnel, customers, owners and society.An organization cannot be sustainable by prioritizing thegoals and needs of some stakeholders at the expense of

others Thus sustainability has a value basis in the dueconsiderations and balancing of different stakeholders

legitimate needs and goals.

(Docherty et al, 2002: 12)


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Sustainability

encompasses three levels: the individual, the

organizational and the societal. Sustainability at one levelcannot be built on the exploitation of the others. These

levels are intimately related to the organizations keystakeholders: personnel, customers, owners and society.An organization cannot be sustainable by prioritizing thegoals and needs of some stakeholders at the expense of

others Thus sustainability has a value basis in the dueconsiderations and balancing of different stakeholders

legitimate needs and goals.

(Docherty et al, 2002: 12)


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Sustainability

There is a widespread view that governments mustsolve environmental problems. However, the major

multinationals outstrip many of the worlds nationaleconomies in terms of wealth and power, and theirglobal coverage allows them to escape therequirements of particular governments seeking toplace severe environmental restrictions on them.

They can simply move their operations acrossnational borders. The worlds multinationals are infact more powerful than most national governments.

(Dunphy and Griffiths, 1998: 183)


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Workforce diversity

Diversity is dissimilarities differences amongpeople due to age, gender, race, ethnicity,religion, sexual orientation, socioeconomicbackground, and capabilities/disabilities Diversity raises important ethical issues and socialresponsibility issues as well. It is also a critical

issue for organizations, one that if not handledwell can surely bring an organization to its knees,especially in our increasing global environment.

(Jones et al, 2000)


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Workforce diversity

contemporary workforce characteristics areradically different from what they were just twentyyears ago. Employees represent every ethnicbackground and color; range from highly educatedto illiterate; vary in age from eighteen to eighty;may appear perfectly healthy or may have

terminal illness; may be single parents or part ofdual-income, divorced, same-sex or traditionalfamilies; and may be physically or mentallychallenged.

(Cummings and Worley, 2001: 429

430)


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Workforce diversity

Over the past decade, more than one-third ofpeople entering the US workforce have been

members of racial or ethnic minority groups.Moreover, the proportion of racial and ethnicminorities in the workforce is expected to increaseindefinitely. The situation is similar in some

European countries.(Hitt et al, 2009)


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Business ethics Ethics are moral principles or beliefs about what is right or

wrong. These beliefs guide people in their dealings with otherindividuals and groups (stakeholders) and provide a basis fordeciding whether behavior is right and proper.

(Jones et al, 2000: 183)

Managers today are usually quite sensitive to issues of socialresponsibility and ethical behavior because of pressure from

the public, from interest groups, from legal and governmentconcerns, and from media coverage. It is less clear where todraw the line between socially responsible behaviour and thecorporations other concerns, or between the conflictingexpectations of ethical behaviour among different countries.

(Deresky, 2000: 56)


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Business ethics The 1990s were a decade of persistently rising markets 10 years

of economic expansion, with investors pouring record amounts intostocks and pocketing double-digit returns year after year. Thedecade was peppered with financial debacles, but these faded

quickly from memory even as they increased in size and complexity.The billion dollar-plus scandals included Robert Citron of OrangeCounty, Nick Leeson of Barings and John Meriwether of Long-TermCapital Management, but the markets merely hiccoughed and thenstarted going up again. When Enron collapsed in late 2001, itshattered some investors' beliefs and took a few other stocks downwith it. Then Global Crossing and WorldCom declared bankruptcy,and dozens of corporate scandals materialised as the leading stockindices lost a quarter of their value. Companies' reported earningswere a fiction and financial reports chock-full of disclosures thatwould shock the average investor if they ever even glanced at them

not that anybody ever did.

(Partnoy, 2003: 1)


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Business ethics A pair of Bear Stearns executives were arrested and charged

with fraud yesterday over the collapse of two hedge funds. Inearly-morning raids, the FBI arrested Ralph Cioffi andMatthew Tannin at their homes in New Jersey and New York.

The pair were handcuffed and escorted, grim faced, into courtin front of a battery of television cameras. According to the USgovernment, the duo concocted a web of lies to persuadeinvestors to keep funds in two mortgage-heavy funds thatevaporated in value in June last year, losing more than $1.4bn(710m) of clients' money. Among the biggest victims was

Barclays Bank, which had pumped in $400m. BentonCampbell, a federal prosecutor, said: They lied in the futilehope that the funds would turn around and that their incomeand reputations would remain intact.

(Clark, 2008)


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Change Amidst Globalization

Jointly Identify Business Problems & Solutions

Develop a Shared Vision & Communications

Identify Change Leaders

Focus on results

Govern & Monitor Change

(By Atul Vashishtha)

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Additional Reading

Please Read articles in folder Lesson 5

128 -lcm 5

Documents